With inflation reduction act, Medicare finally having the power to negotiate prescription drug prices with pharmaceutical industries which will affect millions of Americans across all 50 states and the District of Columbia
It will lead to prescription drug costs capped at USD 2,000 annually in Medicare, and will save hundreds of dollars per year on health insurance premiums because of the law.
Usually, Americans pay two to three times what citizens of other countries pay for prescription drugs. For some drugs, U.S. prices are even higher than that. For example, a GAO study found that Spiriva, used to control asthma and used by about 700,000 Medicare beneficiaries in 2020, had an estimated U.S. net price of USD 250 in 2020 and cost between USD 30 and USD 52 in France, Australia and Canada.
Myrbetriq, used to control overactive bladder and used by over 600,000 Medicare beneficiaries in 2020, had an estimated U.S. net price of USD 164 and cost USD 43 in Canada.
The Inflation Reduction Act finally takes on this problem by allowing Medicare to negotiate prices for high-cost drugs. It also provides seniors and people with disabilities who have Medicare coverage with new protections against unaffordable prescription drug bills.
Currently, Medicare beneficiaries with conditions such as cancer, multiple sclerosis, and lung disease can face thousands of dollars in out-of-pocket prescription drug costs, and millions of people in Medicare struggle to afford their medications. The Act will require Part D plans to offer improved financial protections that would phase in starting in 2024, with the USD 2,000 out-of- pocket cap taking effect in 2025.
By bringing down the cost of these drugs, the legislation will save billions of dollars for both Medicare beneficiaries, who will see reduced out-of-pocket costs, and the federal government.
Drug manufacturers have raised insulin prices so rapidly over the last few decades that some Medicare beneficiaries struggle to afford this life-saving drug that costs less than USD 10 a vial to manufacture. Starting in 2023, the legislation will cap the out-of-pocket cost of insulin for Medicare beneficiaries at no more than USD 35 for a month’s supply.
The Pharmaceutical Research and Manufacturers of America (PhRMA) said, “The president signed into law a partisan set of policies that will lead to fewer new treatments and doesn’t do nearly enough to address the real affordability problems facing patients at the pharmacy. We will explore every opportunity to mitigate the harmful impacts from the unprecedented government price setting system being put in place by this law. We will continue to advocate for policies that give patients better and more affordable access to lifesaving treatments and for a system that supports innovation.”
